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IN LAST WEEK'S COLUMN, I WROTE that the stock sectors that have best resisted the market damage seen in recent weeks are likely candidates to lead the market's next meaningful advance (see Getting Technical, "Stocks Coated with Bear-Repellant," October 13).

One of those sectors was banking and in today's column I would like to present a sample shopping list of potential banking winners.

Most investors are likely familiar with the big names such as
JP Morgan Chasejpm 0.43468045112781956%JPMorgan Chase & Co.U.S.: NYSEUSD85.49
0.370.43468045112781956%
/Date(1481320816956-0600)/
Volume (Delayed 15m)
:
14283053AFTER HOURSUSD85.48
-0.01-0.011697274535033338%
Volume (Delayed 15m)
:
284149
P/E Ratio
14.739655172413793Market Cap
304581834359.245
Dividend Yield
2.245876710726401% Rev. per Employee
421457More quote details and news »jpminYour ValueYour ChangeShort position
(ticker: JPM) and how they have been in a choppy rising trend since July. But there is a long list of small banks and thrifts that have even better technical characteristics.

Local banks are generally less exposed to subprime mortgage loans but that is an argument for fundamental analyst to make.

Despite all the bad news swirling around banks these days, this regional-banking ETF and the entire banking sector have significantly outperformed the broad stock market. Since the July 15 close, this Merrill Lynch ETF is up 20%, while the Standard & Poor's 500 is down by the very same percentage.

The most striking feature of the chart is the set of twin lows in July and October and the potential double bottom pattern they form (see Chart 1).

Chart 1

A double bottom is also known as a "W" pattern due to it appearance. In a down trend, the market makes a low, rallies for several weeks, and then comes back down to test that low. However, the bears aren't able to set a lower low and we get the first indication that the trend may be in jeopardy.

The pattern does not signal a "buy" until prices move above the central peak of the "W." For this ETF, that would be a price of $122.88 as we can ignore the spike high made September 19 on when the news of government rescue hit.

So, what makes an individual bank stock look good in an environment that has been described as a slow motion market crash?

It starts with the above relative performance advantage and then moves on to technical chart patterns and indicators. For example, Beverly Hills, Calif.-based
City National
(CYN) has not only been outperforming the market, but has been able to hold price levels that are far above its own July low (see Chart 2).

Chart 2

While we cannot really call its price action since July a classic rising trend, it has been able to stave off the market's debacle two weeks ago. It is also in an exclusive club of stocks that have their respective 50-day moving average above their 200-day averages.

This is a key development in that it tells us that the stock is already transitioning from bear trend to bull.

Of course, conditions can change, but the stock is only two or three points away from a technical breakout from the technical pullback pattern seen in the chart. If that occurs, the stock would be in what many chart watchers call "proper bull market order" where prices are above the shorter moving average and the shorter average is above the longer average.

TFSL also sports rather encouraging technicals such as rising onbalance volume, which is the net money flowing into or out of a stock. And as for price action, it has formed a trianglelike pattern over the past month that normally acts as a pause within a rising trend.

A move above $13.20, it would be a technical breakout; while a move over $13.50 would be a fresh 52-week high. There are few stocks that can boast proximity to such a milestone as a 52-week high.

There are many banks similar to these two and all it takes is a little digging to find them. Look for stocks that are in a general rising trend since bottoming in July that were also able to resist October's carnage. They should have reasonable inflows of money according to such widely available technical studies as onbalance or cumulative volume. This indicates investor demand even in turbulent times such as todays.

Don't get me wrong, I have not gone bullish on the stock market just yet, but I feel fairly optimistic about the aforementioned banks.

Getting Technical Mailbag:Send your questions on technical analysis to us atonline.editors@barrons.com. We'll cover as many as we can, but please remember that we cannot give investment advice.

Michael Kahn, author of three books on technical analysis, former Chief Technical Analyst for BridgeNews and former director for the Market Technicians Association, also blogs at www.quicktakespro.com/blog.